So you've had some problems that made it difficult or impossible for you to pay your mortgage. Now you want to get a loan modification so the monthly payment is reduced to an affordable level and the threat of foreclosure goes away. But how do you go about applying... and will your lender support you?
The bank provides instructions and a list of documents to submit, but it seems as overwhelming as learning a new language. You may not even know what net present value or DTI is, much less how to calculate it. What you do know is that not modifying your loan will mean losing your home to foreclosure.
The way to deal with a confusing subject is to work with someone who isn't confused by it, someone with experience. For homeowners facing foreclosure and seeking a loan modification, that person is a lawyer with experience in that field.
Many homeowners who talk to their lender are told that they don't need an attorney to get a loan modification, and the money spent on a lawyer would be better spent making up for missed payments. They might tell you that an attorney can't get you anything you can't get on your own.
It is true that an attorney is not required to get a loan modification. But it is a lot of work to do on your own, and it can be very time consuming. Worse, most applications completed by homeowners are denied. So why would your bank encourage you to take on something so important, that you know nothing about, on your own?
1. The Bank Has Different Motivations Than You
This shouldn't be a surprise. Your objective is to keep your home and pay less money, the bank's is to make as much money as possible. When applying for a loan modification, you will be dealing with a mortgage loan servicer. That's the company that takes your payment, credits your account, and distributes the money to the investor who actually owns your loan. The servicer makes money from fees they are paid to service your account. Anything extra, like late fees, that they can charge you just earns them more money. If you get an attorney who asserts your rights, that means the servicer's profitability can take a hit. Servicers will sometimes encourage a homeowner to take a loan modification that's not a very good deal and hope they're not aware they could do better. An experienced attorney will see right through that and hold out for the best deal possible.
2. Attorneys Understand The Law And Loan Modification Process
Banks know that, if you hire an attorney to represent you, they won't be dealing with an amateur who will believe and accept whatever they say. It's common for the servicer to deny a loan modification application and recommend a short sale. At Amerihope Alliance Legal Services, we often see that the servicer is not recognizing all of the borrower's income, or is making some kind of a mistake when they deny an application. When we see this we appeal the denial as many times as it takes to get it right and, if necessary, file a complaint with the Consumer Financial Protection Bureau (CFPB). Homeowners working alone are more likely to accept the initial result and settle for a short sale. From the bank's point of view, lawyers just keep them from getting their way.
3. An Attorney Won't Be Intimidated By The Bank
Your home and the money you have tied up in it make it more than just an investment. It has serious emotions attached to it. The banks will use that to their advantage and try to make you feel guilt and intimidate you into doing something that's in their best interest, not yours. The bank employees are well-trained and get a lot of experience. It's what they do for a living. An attorney knows how to play the game and will not be intimidated.
So it is true that you don't have to have an attorney to get a loan modification, but your odds of success are lower if you go solo. And not having an experienced professional on your side leaves you vulnerable to settling for less or being taken advantage of because of fear or ignorance. Dealing with your bank on your own is like stepping into a boxing ring with a heavyweight champion when you're a lightweight who's never thrown a punch before. It's not going to end well. Make it a fair fight and get a heavyweight on your side!
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